MEMORANDUM

TO: Record

FROM: EPA

DATE: March 18, 2013

SUBJECT: Supporting Information for New Source Model Projects (DCN CBM00666)

EPA developed model projects to represent a typical project1 in each coalbed methane (CBM) 

discharging basin2

• Section 1 discusses basins included in the new source analysis;

to analyze the costs of potential new regulations for the industry. U.S. EPA’s

Economic Analysis for Existing and New Projects in the Coalbed Methane (CBM) Industry

(DCN CBM00680) document describes EPA’s new source analysis and results. This document 

provides details on the new source model project input data:

• Section 2 provides information on the data sources used to develop the model 

projects for each basin; and

• Section 3 discusses the quality of the data sources used.

EPA developed model projects using data from the Detailed Questionnaire, which collected 

industry data as of 2008, and from publicly available data sources. A model project represents an 

average new project for the basin. All project-level data submitted in the Detailed Questionnaire 

are considered confidential business information (CBI); therefore, the specific values for each

model project parameter are provided in a CBI spreadsheet (DCN CBM00666.A1).

1. COAL BASINS INCLUDED IN NEW SOURCE ANALYSIS

Table 1 provides a summary of the basins included in EPA’s new source analysis. The basins 

included in Table 1 had CBM projects that discharged produced water to surface water as of 

2008, the Detailed Questionnaire response year. EPA assumed new projects in these basins may 

also discharge their CBM produced water. EPA excluded basins that use zero discharge methods,

such as underground injection, from the new source analysis because EPA assumed any new 

projects in these basins would also manage the water without discharging and would not incur 

any costs for a potential new regulation. Although projects in the Illinois Basin are expected to 

discharge their CBM produced water, they were excluded from the new source analysis because 

EPA expects CBM development in the Illinois Basin to be limited (Tedesco, 2004).

 1 EPA defines “project” as a well, group of wells, lease, group of leases, or recognized unit that is operated as an 

economic unit when making production decisions.

2 A discharging basin is defined as a basin with CBM operations that may discharge a portion of their water to 

surface water.
Memorandum

January 29, 2013

Page 2

Table 1. Rationale for Scope of Coal Basins Included in EPA’s CBM New Source Analysis

Coal Basin a State(s)

Included in 

New Source 

Analysis? EPA Rationale

Black Warrior Alabama Yes

This basin may have minimal potential for new sources. Based on phone conversations with the state, no new 

wells have been drilled as of 2012 (ERG, 2012). EPA assumed data about the Black Warrior Basin would provide 

appropriate representation for the Cahaba Basin, for which EPA had minimal data.

Greater Green 

River

Wyoming

Colorado Yes

CBM development is expected to continue in this basin. Existing CBM projects have the potential for discharge 

to surface water. According to a company website (Double Eagle Petroleum Co.), CBM development for the 

operator has occurred between 2006 and 2011 and production has increased by over 350% (DBLE, 2011).

Illinois

Illinois

Indiana

Kentucky No

CBM development is expected to be limited. Existing CBM projects have not been considered financially viable, 

and some projects have been abandoned because of operator problems and reservoir characteristics. In Illinois, 

coal-mining companies own individual coal seams through coal severences, which are a roadblock to developing 

CBM resources in the basin (Tedesco, 2004).

North and 

Central 

Appalachian

Kentucky

West 

Virginia

Ohio

Pennsylvania

Virginia

Tennessee Yes

Based on EIA, 2007, the recoverable resources in the Appalachian Basin are still significant. EPA does not have 

additional data about the potential for future CBM development in the Appalachian basin.

Powder River

Wyoming

Montana Yes

CBM development in this basin is relatively new (compared to the eastern US basins). Based on EIA, 2007, the 

recoverable resources in this basin are significant (U.S. DOE, 2006).

Raton

Colorado

New Mexico Yes

CBM development in this basin is relatively new (compared to the eastern US basins). Based on EIA, 2007, the 

recoverable resources in this basin are significant.

a – The coal basins included in Table 1 reported discharging to surface water as of 2008.
Memorandum

January 29, 2013

Page 3

2. MODEL PROJECT SCENARIOS 

For the Appalachian, Black Warrior, and Powder River Basins, EPA developed two model 

project scenarios. Scenario 1 used information from the Detailed Questionnaire and Scenario 2 

used information from publicly available data sources. Table 2 lists the references used to 

develop model project input parameters. For information from the Detailed Questionnaire, EPA 

calculated overall averages for each basin and parameter. Table 2 lists the Detailed Questionnaire 

field names, with question numbers noted parenthetically, for Scenario 1. For information from 

publicly available data, EPA identified only one reported value for each parameter per basin.

Table 2 may list more than one reference for Scenario 2 if the input parameter value was 

identified using different sources for different basins. If information was not available from 

public data sources for the basin, EPA used the Detailed Questionnaire average to supplement 

the Scenario 2 information. 

Table 2. Model Project Assumption References

Input Parameter

Scenario 1 – Detailed 

Questionnaire Question a

Scenario 2 - Existing 

Source Reference a

Basins Using 

Detailed 

Questionnaire 

Data in 

Scenario 2

Wells per project (# wells)

Wells in project (A-1) and 

screener

NA - Detailed 

Questionnaire data (see 

Scenario 1)

Appalachian

Black Warrior

Powder River

Initial gas production

(MCF/day/well) Total gas (B-59)/# days/wells

EIA, 2010; U.S. DOE, 

2002; Vail and Conrad, 

2003 --

Initial water production

(bbl/day/well) Total water (B-63)/# days/wells

EIA, 2010; Petroleum 

Association of WY, 

2005 --

Gas and water decline (%)

Gas projections (B-98) and water 

projections (B-99)

Vail and Conrad, 2003; 

ADEM3

--

; Petroleum 

Association of WY; 

SEC filings

Land cost ($/well)

Lease acquisition sum (B-20) 

and lump sum to secure lease (B22)

U.S. DOE, 2002; 

Ladlee, 2011; Lewis, 

2004 --

Drilling cost ($/well)

Total cost of well drilling (B-47) 

and Total number of wells 

drilled(B-48)

U.S. DOE, 2002; SEC 

filings --

Lease cost ($/well)

One time outlays on project 

development – prior to 2008 (B23) and total outlay on project 

development – 2008 (B-49) EIA, 2010 --

Gas production operating 

cost ($/MCF)

Total O&M costs for gas 

production – 2008 (B-50) and 

total gas (B-59)

EIA, 2010; U.S. DOE, 

2002; Detailed 

Questionnaire data Black Warrior

 3 The Discharge Monitoring Reports (DMRs) from the Alabama Department of Environmental Management 

(ADEM) are referenced in EPA’s Non-CBI Final Pollutant Database (CBM00689).
Memorandum

January 29, 2013

Page 4

Table 2. Model Project Assumption References

Input Parameter

Scenario 1 – Detailed 

Questionnaire Question a

Scenario 2 - Existing 

Source Reference a

Basins Using 

Detailed 

Questionnaire 

Data in 

Scenario 2

Water production 

operating cost ($/bbl)

Total O&M costs for water 

management – 2008 (C2-7) and 

total water managed (C2-3)

U.S. DOE, 2002; 

Detailed Questionnaire 

data Black Warrior

Fixed gas production cost 

($/well)

Assumed 5 percent of total gas 

production operating cost EIA, 2010 --

Fixed water management 

operating cost ($/well)

Assumed 5 percent of total gas 

production operating cost NA b --

NA – Not Available

a – See CBI attachment (DCN CBM00666.A1) for details about how the specific values for each model 

project parameter were calculated.

b – Fixed water management cost is included in fixed gas production cost reported in U.S. DOE 2010.

3. NEW SOURCE MODEL PROJECT DATA SOURCES AND QUALITY DISCUSSION

Table 3 presents all of the data sources used to develop model projects and includes a brief 

discussion of the data source quality and the data used from the source. EPA used the producer 

price index (PPI) to convert input data to 2010 industry costs for use in the new source model 

project input data. Table A 1 in the appendix lists each data source presented in Table 3 with 

EPA’s evaluation of the data source against the requirements in the Quality Assurance Project 

Plan for the Coalbed Methane Existing Data Collection (QAPP) (CBM00693). The QAPP 

discusses specific acceptance criteria that dictate whether or not the data are acceptable for use in

developing:

• Industry Profile;

• Produced Water Characteristics;

• Treatment Technology Performance; and

• Treatment Technology Cost.

The new source analyses used industry profile and treatment technology cost data. Table A 2

presents the acceptance criteria for these two topics.
Memorandum

January 29, 2013

Page 5

Table 3. Data Sources Used to Develop New Source Model Projects and General Assumptions and Data Source Quality

Citation Title Data Source Quality Discussion Data Used a

ALL, 2006

ALL Consulting (ALL). 2006. A Guide to Practical 

Management of Produced Water from Onshore Oil and 

Gas Operations in the United States. October 2006. 

Prepared for US DOE, National Petroleum Technology 

Office. EPA-HQ-OW-2008-0517 (DCN 10000).

Source represents CBM operations and 

is a publication from a recognized 

industry expert.

ALL Consulting provides cost data for ion 

exchange.

ADEM

Alabama Department of Environmental Management

(ADEM).

4

State database of discharge monitoring 

report (DMR) data. Data reported to 

state by operators per their permit 

requirements.

The Alabama O&G Commission provides DMR 

data for the Black Warrior and Cahaba basins. 

EPA used these data to develop average water 

decline rates for model projects in these basins. 

The accompanying CBI spreadsheet presents these 

values.

Detailed 

Questionnaire 

data5

U.S. EPA, 2009. Detailed Questionnaire for the 

Coalbed Methane Extraction Sector. October.

Primary data. See Quality Assurance 

Project Plan for the Review and Data 

Entry of the Engineering Portions of the 

Coalbed Methane Questionnaire and

Quality Assurance Project Plan for the 

Economic Portion of the Coalbed 

Methane Detailed Questionnaires and 

Coalbed Methane Economic Analysis 

Task.

EPA used economic and production data from the 

Detailed Questionnaire to develop all of the 

Scenario 1 model projects and to supplement the 

Scenario 2 model projects, where needed.

CSM, 2009

Colorado School of Mines (CSM). 2009. An Integrated 

Framework for Treatment and Management of 

Produced Water: Technical Assessment of Produced 

Water Treatment Technologies 1st Edition. RPSEA 

Project 07122-12. November 2009. EPA-HQ-OW2008-0517 (DCN 10007).

Source represents CBM operations and 

is a publication from a recognized 

industry expert.

The Colorado School of Mines provides cost data 

for ion exchange. See accompanying CBI 

spreadsheet for details about these cost 

calculations.

Drake, 2007

Drake Water Technologies. 2007. Drake Process 

Technology: Scope and Pricing Summary. EPA-HQOW-2010-0824 (DCN 05283).Source represents CBM operations and 

is a publication from an industry vendor.

The Drake Water Technologies document presents 

cost data for the Drake ion exchange treatment 

system. See accompanying CBI spreadsheet for 

details about these cost calculations.

 4 Discharge Monitoring Reports (DMRs) from the Alabama Department of Environmental Management (ADEM) were provided via internal file transfer protocol (ftp).

These data are included in EPA’s Non-CBI Final Pollutant Database (CBM00689). 5 The CBM Detailed Questionnaire was sent to CBM operators in 2009 requesting information for 2008 operating conditions.
Memorandum

January 29, 2013

Page 6

Table 3. Data Sources Used to Develop New Source Model Projects and General Assumptions and Data Source Quality

Citation Title Data Source Quality Discussion Data Used a

EIA, 2010

Energy Information Administration (EIA). 2010. Oil & 

Gas Lease Equipment and Operating Costs 1994 

Through 2009. Released: September 28. Available 

online at: 

http://www.eia.gov/pub/oil_gas/natural_gas/data_publi

cations/cost_indices_equipment_production/current/co

ststudy.html

Government publication reflecting 

current CBM practices.

EIA provides data about lease costs, gas 

production and cost data, and water production and 

cost data. EPA used these data to develop scenario 

2 model projects for the Appalachian, Black 

Warrior, and Powder River basins.

Ladlee, 2011

Ladlee, Jim. 2011. The Implications of Multi-Well 

Pads in the Marcellus Shale. Cornell's Research & 

Policy Brief Series. September. Available online at: 

http://devsoc.cals.cornell.edu/cals/devsoc/outreach/card

i/publications/loader.cfm?csModule=security/getfile&P

ageID=1016988

Source represents CBM operations and 

is a university publication.

Ladlee provides land cost data for eastern U.S. 

CBM basins (i.e., Appalachian, Illinois).

Lewis, 2004

Lewis, Terry. 2004. Federal Government Leases Land 

in Alabama, Arkansas, Louisiana, Michigan, and 

Mississippi, for Oil and Gas Exploration. September 

24. Available online at: 

http://www.blm.gov/pgdata/etc/medialib/blm/es/og_sal

es.Par.2900.File.dat/PR_Oil&GasLeaseSept23_04.pdf

Government publication reflecting 

current CBM practices.

Lewis provides land cost data for Alabama CBM 

basins (i.e., Black Warrior, Cahaba). 

Petroleum 

Association 

of WY, 2005

Petroleum Association of Wyoming. 2005. CBNG 

Water Management and Treatment Options in 

Wyoming's PRB. October. Available online at: 

http://deq.state.wy.us/wqd/wypdes_permitting/WYPD

ES_cbm/Pages/CBM_Watershed_Permitting/Tongue_

PrairieDog_HangingWoman_Badger_Creek]/Tongue%

20PHB%20Downloads/Meeting%202%206-8-

06/WSBP%20Water%20Mange%20Pres%206-06.pdf

Source represents CBM operations and 

is a publication from an industry trade 

organization.

The Petroleum Association of Wyoming provides 

water production and decline data for western U.S. 

CBM basins (i.e., Powder River, Green River, 

Raton).

PPI

U.S. Bureau of Labor Statistics (BLS). Producer Price 

Index (PPI). Available online at: 

http://www.bls.gov/ppi/

Government publication. Standard price 

reference.

The Producer Price Index was to calculate cost 

year conversions throughout the new source 

analysis. 
Memorandum

January 29, 2013

Page 7

Table 3. Data Sources Used to Develop New Source Model Projects and General Assumptions and Data Source Quality

Citation Title Data Source Quality Discussion Data Used a

SEC Filings

U.S. Securities and Exchange Commission (SEC)

Filings for the following companies 

Constellation Energy Partners LLC's SEC 

Filing (2007) 

(http://www.sec.gov/Archives/edgar/data/136

2705/000119312508045648/d10k.htm)

GeoMet, Inc's SEC Filing (2011) 

(http://www.sec.gov/Archives/edgar/data/135

2302/000119312512140602/d280036d10k.ht

m)

Summit Gas's SEC Filing (2009) 

(http://www.summitgas.com/Docs/10_K_3_3

1_10.pdf) SEC filing from CBM operator.

EPA used SEC filings to calculate average gas 

decline rates and drilling costs for CBM basins 

included in the new source analysis. 

U.S. DOE, 

2002

U.S. Department of Energy (DOE), Office of Fossil 

Energy and National Energy Technology Laboratory 

(NETL). 2002. Powder River Basin Coalbed Methane 

Development and Produced Water Management Study. 

November. Prepared by Advanced Resources 

International, Inc. (ARI). Available online at: 

http://www.fe.doe.gov/programs/oilgas/publications/co

albed_methane/PowderRiverBasin2.pdf

Government publication reflecting CBM 

practices.

U.S. DOE provides information about gas 

production and operating costs and land and 

drilling costs in the western U.S. CBM basins. 

EPA also used the baseline water production 

operating costs provided by U.S. DOE to apply 

costs for the Powder River Basin.

U.S. DOE, 

2006

U.S. DOE, 2006. The Economics of Powder River 

Basin Coalbed Methane Development. January. 

Prepared by Advanced Resources International, Inc. 

(ARI). Available online at: 

http://www.sentrypetroleum.com/wpcontent/uploads/the_economics_of_powder_river_basi

n_coalbed_methane_development.pdf

Government publication reflecting CBM 

practices.

EPA used information from U.S. DOE to estimate 

hurdle rates.
Memorandum

January 29, 2013

Page 8

Table 3. Data Sources Used to Develop New Source Model Projects and General Assumptions and Data Source Quality

Citation Title Data Source Quality Discussion Data Used a

Vail and 

Conrad, 2003

Vail, Bill and Matt Conrad (Marshall Miller and 

Associates). 2003. Coalbed Methane Development, An 

Issues Overview. October 29. West Virginia Coal Bed 

Natural Gas Workshop6

. Roanoke, WV. Available 

online at:

http://www.wvenergyroadmapworkshops.org/presentat

ions/03Oct_Miller.pdf

Source represents CBM operations and 

is a presentation by an engineering 

company presented at a CBM workshop.

Vail and Conrad provides information about gas 

production and decline rates.

a – See accompanying CBI spreadsheet for details about the new source model project input parameters.

 6 The West Virginia Coal Bed Natural Gas Workshop was part of the Energy Roadmap Workshop Series commissioned by West Virginia governor Bob Wise.
Memorandum

January 29, 2013

Page 9

3.1

1. DBLE, 2011. Double Eagle Petroleum Company website. Available online at: 

http://www.dble.com/Home

References

2. EIA, 2007. US Coalbed Methane: Past, Present, and Future; U.S. Energy Information 

Administration, November 2007.

3. ERG, 2012. Coalbed Methane State Phone Calls. Various Dates and Contacts. EPA-HQOW-2010-0824. DCN ##.

4. Tedesco, Steven. 2004. Coalbed Methane Potential and Activity of the Illinois Basin. 

Prepared in association with Dorado Gas Resources LLC. Adapted from presentation at 

AAPG Annual Meeting in Salt Lake City, Utah (May 11-14, 2003). 
Memorandum

January 29, 2013

Page 10

4. APPENDIX A

The following designations are used within the acceptance criteria of Table A 1:

NA – Acceptance criteria does not apply to the given data source. 

 – Data source meets the associated criteria listed in Table A 2.

A – Data source is not an industry operator, vendor, or government source but is from a recognized industry expert.

B – Data source is for whole system and does not include a discussion of costs for specific components of the system (e.g., 

transportation, fuel, labor, chemicals).

C – Data source refers to oil and gas or shale operations. EPA assumed that land cost data for these operations would be similar to 

CBM operations.

D – Data source is from an organization whose reputation is unknown (see Table 3 for specific details about this data source).

Table A 1. Data Sources Evaluation of Acceptance Based on QAPP Criteria

Citation Key Data Used Data Quality Notes

Acceptance Criteria a

Currency Accuracy/Reliability Scope Reasonableness

ALL, 2006 Cost data for ion exchange

Source represents CBM operations and is a 

publication from a recognized industry expert. NA A B 

ADEM

DMR data for the Black Warrior and

Cahaba basins used to develop

average water decline rates for model 

projects in these basins

State database of DMR data. Data reported to 

state by operators per their permit requirements.

   

Detailed 

Questionnaire 

data (2008) Economic and production data

Primary data. See Quality Assurance Project 

Plan for the Review and Data Entry of the 

Engineering Portions of the Coalbed Methane 

Questionnaire.

   

CSM, 2009 Cost data for ion exchange

Source represents CBM operations and is a 

publication from a recognized industry expert. NA A  

Drake, 2007

Cost data for the Drake ion exchange 

treatment system

Source represents CBM operations and is a 

publication from an industry vendor. NA  B 

EIA, 2010

Lease costs, gas production and cost 

data, and water production and cost 

data for the Appalachian, Black 

Warrior, and Powder River basins

Government publication reflecting CBM 

practices.

   

Ladlee, 2011

Land cost data for eastern U.S. CBM 

basins (i.e., Appalachian, Illinois)

Source represents CBM operations and is a 

university publication.

  C 
Memorandum

January 29, 2013

Page 11

Table A 1. Data Sources Evaluation of Acceptance Based on QAPP Criteria

Citation Key Data Used Data Quality Notes

Acceptance Criteria a

Currency Accuracy/Reliability Scope Reasonableness

Lewis, 2004

Land cost data for Alabama CBM 

basins (i.e., Black Warrior, Cahaba)

Government publication reflecting CBM 

practices.

  C 

Petroleum 

Association 

of WY, 2005

Water production and decline data for 

western U.S. CBM basins (i.e., 

Powder River, Green River, Raton)

Source represents CBM operations and is a 

publication from an industry trade organization.

   

PPI Cost year conversions

Government publication. Standard price 

reference. NA NA NA NA

SEC filings

Average gas decline rates and drilling 

costs

Actual financial data reported by CBM 

operators.

   

U.S. DOE, 

2002

Gas production and operating costs 

and land and drilling costs in the 

western U.S. CBM basins; Baseline 

water production operating costs for 

the Powder River Basin

Government publication reflecting CBM 

practices.

   

U.S. DOE, 

2006 Hurdle rates

Government publication reflecting CBM 

practices.

   

Vail and 

Conrad, 2003

Gas production and decline rates Source represents CBM operations and is a 

presentation by an engineering company 

presented at a CBM workshop.

 D  

a – See Table A 2 for descriptions of the acceptance criteria from the Quality Assurance Project Plan for the Coalbed Methane Existing Data Collection (QAPP) (DCN 

CBM00693).
Memorandum

January 29, 2013

Page 12

Table A 2. QAPP Acceptance Criteria

Topic Industry Profile Treatment Technology Cost Data

Currency

Published or presented in 2001 or after. EPA may use 

information from sources prior to 2001 if it represents practices 

currently in place.

NA - Costs per year basis are reported. 

EPA converted all costs to a standard year.

Accuracy/ 

Reliability

EPA assumes the following sources are accurate:

• Government publications;

• Peer-reviewed journal articles;

• Presentations at professional technical conferences; and 

• Publications from recognized industry experts or 

organizations.

Data are obtained directly from the CBM operator, a vendor who does 

business with CBM operators and/or government entities collecting data 

from CBM operators.

Scope

Information pertains to CBM operations and not conventional oil 

and gas or shale gas. Reflect the costs for equipment, including transportation and installation, 

supplies, operating costs (e.g. electricity, fuel, labor, chemicals), and labor at 

Representativeness CBM locations.

Source represents a geographic area in which CBM operations 

are active or emerging

Reasonableness

EPA will compare information collected from

secondary data sources to primary sources (e.g., CBM

Detailed Study Report, Detailed Questionnaire data) to confirm 

the information is reasonable based on documented CBM 

practices.

Cost trends follow the design basis trends (e.g., costs for large produced 

water volumes are greater than the costs for small volumes).

Comparability

Order-of-magnitude of costs is comparable to costs for similar installations 

at similar operations.

Completeness NA

Includes costs for any of the elements necessary to

implement the technology option:

• One-time costs for equipment purchase and installation;

• On-going operating and maintenance costs (annual costs); and

• Periodic operating and maintenance costs, as appropriate.